1 Song Tao heads the Taiwan Affairs Office
PRC state media reported that several Chinese entities formally submitted multiple applications to the International Telecommunication Union (ITU) for satellite network frequencies and orbital resources between Dec. 25 and 31, 2025. The entities were looking to launch 203,000 satellites (primarily targeting low earth orbit [LEO] satellite systems) covering 14 satellite constellation plans, marking China’s largest single coordinated filing to date.
The filing entities were not limited to traditional satellite operators but included a broad range of subjects such as national-level research institutes, commercial space companies, and telecommunications carriers. Notable applicants were China Satellite Network Group (China Starlink/Guowang), China Mobile, and Shanghai Spacecom Satellite Technology (SSST/Yuanxin).
Industry analysis cited by the PRC media said that the move is intended to preemptively secure scarce LEO spectrum and orbital resources (following the “first-come, first-served” principle) to reserve capacity for the future large-scale deployment of satellite internet. Additionally, the move was a response to intensifying global competition for space resources, particularly against SpaceX’s Starlink.
The reports also noted that these filings are part of the routine procedures required by the ITU. The process from filing to actual launch, network formation, and service provision typically takes a long time, ranging from several years to more than a decade.
ITU rules and procedural requirements
According to the ITU Radio Regulations, a satellite system must complete procedures such as filing, coordination, and registration between two and seven years prior to launch. This is a mandatory step for the deployment of any satellite network.
However, a successful filing does not automatically grant the right to actual deployment. The ITU stipulates specific milestones:
- 7 Years: The first satellite must be launched and commence operations within seven years of the filing date.
- 9 Years: 10 percent of the total constellation must be deployed.
- 14 Years: 50 percent of the total constellation must be deployed.
- 21 Years: The entire constellation must be fully deployed.
Failure to meet these milestones may result in the reduction or reclamation of the allocated frequency and orbital resource rights.
Globally, several countries have already filed for satellite constellations at a scale exceeding 100,000 satellites.
Status of China’s LEO satellite development
Presently, the PRC follows a nationwide, state-coordinated model similar to that used for other major projects. This model can be summarized as “national team leading, local teams supporting, and private firms supplementing” (國家隊引領、地方隊支撐、民營補充).
National team
The central state-owned enterprise China SatNet leads the “GW Constellation,” whose goal is to centrally coordinate China’s LEO satellite resources and deploy nearly 13,000 satellites. Currently, 136 satellites are in orbit. As a national-level strategic infrastructure, China SatNet integrates the resources of traditional aerospace giants such as the China Aerospace Science and Technology Corporation (CASC) and the China Aerospace Science and Industry Corporation (CASIC).
Local teams
Backed by the Shanghai municipal government, Shanghai Yuanxin Satellite Technology Co., Ltd. (SSST) leads the “Qianfan Constellation / G60” project. SSST’s target is to complete a network of 15,000 satellites by the end of 2030, with 108 satellites currently in orbit. While SSST carries a strong local government flavor (linked to Yangtze River Delta integration), it operates with greater commercial flexibility and has progressed relatively quickly. SSST aims to drive industrial clustering and concentrate resources to counter SpaceX Starlink’s first-mover advantage.
Private companies
The private firm LandSpace is involved in the “Honghu-3 Constellation,” which also plans for 10,000 satellites. This is China’s third ten-thousand-satellite-scale constellation submitted to the ITU. LandSpace benchmarks itself against SpaceX’s Starlink, and is independently developing the Zhuque series of launch vehicles to achieve a SpaceX-like model of “launching its own satellites with its own rockets.” At present, the number of satellites it has in orbit is only in the single digits.
Our take
LEO satellites have evolved beyond simple communication tools to become core strategic assets in the current geopolitical landscape. For the CCP, LEO satellites have become central to ensuring its “digital sovereignty,” implementing its military doctrine of “systems destruction,” and driving economic structural transformation. As Starlink demonstrated its ability to reshape the nature of warfare in the Russia-Ukraine conflict, Beijing realizes that the deployment of space-based networks is directly tied to national survival and its discursive power in global competition. Given the urgency of the geopolitical situation and the “first come, first served” international rules governing near-Earth orbital resources, the PRC is racing to apply for satellite network frequencies and orbital slots even though its reusable rocket technology has not yet fully matured.
The CCP authorities have incorporated satellite internet into its “new infrastructure” framework, granting it the highest priority in the 14th and 15th Five-Year Plans. The PRC, however, faces multiple challenges in playing the catch-up game (represented by projects just as “Guowang” and “Qianfan/G60”), including a generational gap in launch vehicles, constraints imposed by international regulations, standardization disputes, and systemic financial risks. In particular, when large amounts of state capital flow into a highly uncertain, technology-intensive sector with long payback periods, projects may face risks of corruption and “unfinished” failures (i.e. abandoned projects) reminiscent of the PRC’s earlier semiconductor “Great Leap Forward.”
1. The CCP’s rush to apply for satellite network frequencies and orbital resources is likely aimed at accelerating the PRC’s competition with the West in the realm of satellite internet.
i) The primary driving force behind the CCP’s vigorous development of LEO satellite networks is the establishment of a “sovereign internet” completely independent of U.S. control. By building its own LEO satellite systems, the PRC seeks to ensure that in extreme scenarios — such as sanctions or war — its communications networks, financial data exchanges, and command-and-control systems will remain functional.
The proliferation of LEO services will also expand Beijing’s ability to monitor and manage global information flows. Chinese satellite services may integrate domestic censorship standards and mandate specific encryption protocols for its citizens or partner nations.
Finally, the PRC’s large-scale satellite network applications (such as a single application covering 200,000 satellites) are essentially an attempt to take advantage of ITU’s “first come, first served” policy to engage in “scale-based occupancy” to prevent U.S. monopolies in scarce orbital space.
ii) The People’s Liberation Army views LEO satellites as a core component of “systems confrontation” in modern warfare and takes Starlink as a benchmark for its own development.
Currently, the PLA is tapping LEO satellite networks to integrate sensors, strike platforms, and command centers into a non-linear, decentralized “kill web.”
- Enhanced precision strikes: By integrating near-real-time target-location data from Yaogan (remote sensing) and Gaofen (high-resolution) satellites, the PLA can significantly shorten the time from detection to destruction of targets like aircraft carriers and mobile missile launchers.
- Hypersonic missile support: LEO satellite networks can provide continuous relay guidance and tracking for hypersonic weapons such as the DF-17, bypassing blind spots in traditional ground-based radar coverage.
- Compensation for anti-satellite vulnerabilities: The PLA believes that distributed LEO constellations are more difficult to destroy than traditional large high-orbit satellites. This “resilience” helps ensure that communications will not be paralyzed during space warfare.
As the PRC applies LEO satellite networks, it is also accelerating the development of both “soft-kill” and “hard-kill” counter-Starlink capabilities, including ground-based laser weapons ASAT lasers and electronic-warfare payloads specifically designed to jam LEO broadband frequencies, with the aim of crippling an adversary’s information advantage in wartime. In November 2025, researchers from the National University of Defense Technology and Beihang University published a paper in the Journal of Systems Engineering and Electronics estimating that jamming Starlink communications over the Taiwan region would require 1,000 to 2,000 drones.
iii) LEO satellites are also key tools for the PRC’s implementation of the “Digital Silk Road” and “orbital diplomacy,” both of which are aimed at weakening Western technological hegemony in developing countries and enhancing the CCP’s leadership in the “Global South” and internationally.
By offering low-cost LEO solutions to countries like Brazil, Malaysia, Thailand, and African nations, Beijing seeks to promote its 6G standards and the Beidou Navigation System as universal standards for the Global South. Successful LEO deployment combined with 6G would create a “hardware — services — standard” closed loop where future terminal devices (e.g., autonomous vehicles, Internet-of-Things sensors) may be forced to support Chinese protocols to operate globally, effectively locking the global supply chain into PRC standards. Partnering nations will develop a long-term technical dependency on China, granting Beijing privileges in data analysis and information dissemination within those regions.
The PRC is already making inroads in this area. In late 2024, China’s “Qianfan” project signed a memorandum of cooperation with Brazil’s Telebras, planning to provide satellite internet to remote areas of Brazil by the first half of 2026. This was seen as an effort by the PRC to directly enter into markets traditionally dominated by Starlink.
2. Beyond geopolitical competition, the CCP authorities’ urgent push to develop LEO satellite networks could also be driven by economic pressure. Against the backdrop of a domestic economic downturn and the collapse of the real estate-driven growth model, the satellite industry appears to have been tasked with spearheading “new quality productive forces.”
The CCP stated in its 15th Five Year Plan an intention to shift resources away from inefficient infrastructure and real estate toward “strategic emerging industries.” Compared with the historical peak of China’s real estate sector in 2021 — when nationwide commercial housing sales reached 18.19 trillion yuan — real estate activity in 2025 (with estimated nationwide sales of about 8.8 to 9.0 trillion yuan) has fallen by roughly 50 percent. Promoting a LEO satellite economy is seen as a way to offset part of this loss.
China’s LEO satellite economy mainly drives growth across four segments: satellite manufacturing (about 25 percent); rocket launches (about 15 percent); ground equipment and terminals (about 30 percent); and downstream applications and operations (about 30 percent). According to mainland media reports, China’s overall commercial space market in 2024 exceeded 2.3 trillion yuan in size with annual growth rates of over 20 percent to 25 percent — vastly outpacing traditional manufacturing.
The LEO satellite economy also generates regional spillover effects. Shanghai’s Songjiang District, through the “G60 Science and Innovation Corridor,” has brought in the State-owned Assets Supervision and Administration Commission and state-owned venture capital funds in an effort to build a complete industrial chain from satellite manufacturing to launch services. This project is likely aimed at transforming the satellite industry into a new source of local fiscal revenue and employment growth.
In capital markets, the STAR Market (Sci-Tech Innovation Board) has opened a fast-track channel for satellite companies that are not yet profitable but have achieved key technological milestones. This is an effort by the CCP to steer excess social capital into high-tech sectors in the real economy rather than allowing it to remain trapped in real estate debt.
As the “brain” and “eyes” of low-altitude flight, LEO satellites also create new growth points for the low-altitude economy. China’s low-altitude economy could reach 1.5 trillion yuan in output value by 2025 and is expected to exceed 3.5 trillion yuan by 2035, according to mainland media.
3. Despite the PRC’s notable achievements in traditional aerospace fields (such as lunar exploration and the space station), it still faces severe technological bottlenecks and institutional constraints in the “commercialized, scaled, low-cost” race for LEO satellites. Concurrently, the CCP’s “whole-of-nation” approach to investing in the satellite industry contains serious systemic risks.
i) Even with ample funding, Beijing will struggle to play catch-up in a satellite race where its main competitor has a sizable advantage.
- Starlink has already transitioned from technical validation to a state of highly mature, large-scale operation, while “Thousand Sails Constellation” — China’s fastest-moving commercial project — is still in its early development and ecosystem-building phase. As of January 2026, the scale and coverage of “Thousand Sails Constellation” represent only about 1 percent of Starlink’s.
- Although LEO space (at altitudes of roughly 300 to 2,000 kilometers) is vast, the prime orbital planes and frequency resources suitable for high-capacity communications are extremely limited. Because the ITU follows a “first come, first served” principle, SpaceX has already locked in a large share of the most optimal orbital positions. If Starlink completes its planned deployment of 42,000 satellites, it would consume nearly 80 percent of global LEO capacity.
- SpaceX’s dominance of optimal orbital positions means that Chinese companies will enter the market using “sub-optimal orbits.” This introduces significantly more complex challenges in collision avoidance, frequency interference coordination, and higher operational costs, which inherently inflate the system’s overall construction and maintenance expenses.
- LEO satellite constellations have short life cycles (typically 5–7 years), requiring extremely strong “continuous replenishment” capabilities. At present, launch vehicle payload capacity and launch costs are the most critical bottlenecks constraining China’s satellite network deployment.
- In 2024, the U.S. deployed 2,272 satellite payloads, while the PRC deployed only 264 — an eightfold gap. The core reason for this disparity is the lack of reusable rocket technology. China’s reusable rocket development is currently in a “trial-and-error phase” similar to where SpaceX was before 2015. Unlike SpaceX at that time, however, Chinese firms now face an extremely compressed timeline. If they cannot achieve low-cost, large-scale launches between 2026 and 2027, China may fail to meet ITU-mandated milestones and risk losing its allocated frequency resources.
ii) Beijing would be dealt a comprehensive strategic blow if its push into LEO satellites goes the way of the semiconductor “Great Leap Forward” and ultimately ends in unfinished projects or inferior technology that cannot effectively compete with the West.
- The CCP authorities’ semiconductor fund previously adopted an “indiscriminate” investment strategy, pouring capital into numerous firms managed by former government officials lacking professional expertise. Similarly, in the satellite sector, local governments (such as Shanghai, Beijing, and Wuhan) are racing to establish “aerospace industrial parks” with unclear impacts on how they would help satellite development. This fragmented and even redundant approach to satellite industry investment is likely to result in a massive waste of resources.
- Many managers responsible for reviewing aerospace investments come from government administrative backgrounds rather than engineering or finance. They tend to allocate funds based on political directives rather than technological maturity, which could cause capital to flow to “policy arbitrage” firms skilled at writing reports (solely to justify securing the funding) rather than developing technology.
- In pursuit of metrics such as “number of satellites” and “first-launch success,” state capital could end up ignoring the most critical factors — “cost per kilogram to orbit” launch price and commercial viability. If satellites fail to generate commercial value after launch, their annual maintenance and depreciation costs will become heavy burdens on state-owned banks.
- LEO satellites are extremely capital-intensive and highly depreciating assets. Thousands of satellites that cannot provide competitive bandwidth due to technological obsolescence may turn into “space scrap” incapable of generating cash flow. This would not only force participating state-owned telecom operators (China Mobile, China Telecom, China Unicom) to take massive impairment charges, but also undermine local government credit systems.
- If Chinese satellite technology lags behind, it could lead to China being marginalized in international telecommunications standards. For instance, if Chinese satellite networks cannot achieve interoperability with global NTN (Non-Terrestrial Network) protocols, Chinese smartphone manufacturers will face a difficult dilemma: support a domestic “isolated standard” or purchase Western satellite solutions for export. Such technological decoupling would weaken the global competitiveness of China’s communications industry and erode its influence in high-end applications such as global autonomous driving and remote industrial control.
iii) To ease fiscal pressure, the Shanghai Stock Exchange has opened a fast track on the STAR Market. This allows rocket companies that are not yet profitable to list after achieving “key technological milestones” rather than profit benchmarks. While this policy can accelerate fundraising, it also risks creating asset bubbles. If listed companies continue to fail in developing reusable technologies or are blocked due to missed ITU milestones, a collapse in share prices could trigger cascading financial shocks.
Currently, primary market valuations on the STAR Market are inflated, with capital being funneled into “hardware optics” like launch pads and infrastructure rather than core R&D. For example, by January 2026, LandSpace reached a valuation of 20 billion yuan as it prepared for its IPO, while the “Thousand Sails Constellation” ecosystem’s fundraising requirements have already exceeded 7 billion yuan.
4. In summary, China’s LEO satellite industry is at a precarious yet high-potential turning point. While the influx of massive state capital has solved the initial “seed funding” problem, it has introduced deep-seated institutional corruption and the risk of unfinished projects.
The dual pressure of a technological generation gap (specifically in reusable rockets) and international regulatory deadlines has turned Beijing’s foray into the satellite industry into a “life-or-death” race against time. If the Xi Jinping leadership cannot overcome systemic flaws and bureaucratic inertia, this hundreds-of-billions-yuan tech race could become China’s largest “asset black hole,” leading to the loss of orbital resources, fiscal collapse, and the long-term erosion of digital sovereignty.
2 Decoding political signals at the 20th CCDI’s 5th Plenary Session
5th CCDI plenum
The CCP convened the Fifth Plenary Session of the 20th Central Commission for Discipline Inspection from Jan. 12 to Jan. 14. With the exception of Ma Xingrui, all other Politburo members and state leaders were present.
Xi Jinping attended the meeting and delivered an important speech. Key points of his speech included:
- Xi affirmed Party Central’s anti-corruption achievements in 2025.
- Xi laid out the arrangements for anti-corruption work in 2026:
- The entire Party must ensure the implementation of all decisions and deployments under the 15th Five-Year Plan. Supervision and inspection must be more precise to ensure the effective rollout of major decisions such as developing “new quality productive forces” and promoting “common prosperity.”
- The Party’s “self-revolution” focuses on governing power. There is a need to “confine power within an institutional cage” (把權力關進制度籠子), improve laws and regulations, and strengthen the “rigid constraints” (剛性約束) of institutions. Leading cadres (一把手) must take the lead in implementing these systems.
- Xi said that “the fight against corruption is a major struggle that we cannot afford to lose and must never lose.” At present, the anti-corruption struggle remains “severe and complex,” and the task of eliminating the breeding ground and conditions for corruption remains arduous. It is necessary to maintain a high-pressure stance, enhance the “penetrative power” of anti-corruption efforts, and advance in an integrated manner the mechanisms of “not daring to be corrupt, being unable to be corrupt, and not wanting to be corrupt” (不敢腐、不能腐、不想腐).
- Local leadership transitions will begin this year. Truly loyal, reliable, consistent, responsible, and accountable good cadres must be put to use.
- Xi also required disciplinary inspection and supervision organs to forge an ironclad force that is sound in “politics, capability, conduct, and integrity” (政治、能力、作風、廉潔).
According to the meeting communiqué:
- The meeting first carefully studied and deeply understood Xi Jinping’s important speeches. The meeting unanimously agreed that Xi’s speeches fully affirmed the notable achievements made in 2025 in advancing comprehensive and strict Party governance. Xi’s speeches are described as being “lofty in vision, broad in perspective, profound in thought, and rich in content, with strong political, ideological, and guiding significance,” pointing the way forward and providing fundamental guidance for “further advancing comprehensive strict governance of the Party and the fight against corruption.” The meeting also unanimously stated that it would take Xi’s important speeches as guidance, persistently strengthen political supervision, and consistently remain loyal, clean, responsible, and courageous (忠誠乾淨) in struggle.
- The meeting reviewed the work of 2025, summarizing achievements over the past year in political supervision. These include correcting the “four winds” (formalism, bureaucratism, hedonism, and extravagance); anti-corruption efforts in key sectors (finance, state-owned enterprises, energy, fire safety, tobacco, healthcare and pharmaceuticals, universities, sports, development zones, public welfare and charity, workplace safety, engineering construction, and bidding and tendering); and the rectification of corruption affecting the daily lives of the masses.
- The meeting stated that anti-corruption organs have adhered to Xi Jinping Thought as their guiding principle, more firmly upheld the “Two Establishes” and resolutely implemented the “Two Safeguards,” and more firmly fought to safeguard Party unity and to defend the Party’s advanced nature and purity. It noted that disciplinary inspection bodies have focused closely on the major political responsibility of the “Two Safeguards,” strengthened political supervision, deepened political inspections, and achieved high-quality full coverage of inspections across provinces, autonomous regions, and municipalities, effectively ensuring the implementation of the Party Central’s major policies.
The meeting identified six key tasks in laying out work for 2026:
1. Strengthen political supervision.
- Strictly enforce political discipline and discipline related to leadership transitions.
- Resolutely remove “two-faced individuals” who harbor divided loyalties and whose words and deeds do not match.
- Focus on resolving the problem of the “seven issues of concern” (七個有之, or engaging in favoritism and nepotism, excluding or alienating those who differ; forming cliques and factions; engaging in anonymous accusations, fabricating rumors, or spreading slander; buying hearts and minds, canvassing votes or manipulating elections; promising official positions, celebrating promotions prematurely, or engaging in quid pro quo; acting independently, disobeying orders while paying lip service; and becoming too powerful to control, openly or privately challenging Party Central).
- Seriously correct ideological liberalism, political opportunism, organizational factionalism, work-related departmentalism, and responsibility-evading “good-guyism”
- Effectively safeguard the “quan wei” and centralized, unified leadership of the Party Central with Comrade Xi Jinping at the core.
- Ensure a strong start to the 15th Five-Year Plan.
2. Deepen efforts to improve conduct and enforce discipline, and implement the Central Eight-Point Regulation.
- Continue to rectify formalism and bureaucratism.
- Resolutely address inaction caused by waiting and watching during leadership transitions, as well as post-transition problems such as short-termism, policy reversals (“flipping pancakes”), and “vanity projects.”
- Promote burden reduction at the grassroots level.
3. Address both symptoms and root causes, and advance in an integrated manner the mechanisms of “not daring to be corrupt, being unable to be corrupt, and not wanting to be corrupt.”
- Deepen anti-corruption efforts in key sectors such as finance, state-owned enterprises, energy, education, academic societies and associations, development zones, and bidding and tendering.
- Strictly investigate collusion between officials and business, the use of power to shield capital, and the penetration of capital into political spheres.
- Thoroughly uncover and investigate new and hidden forms of corruption, such as expected returns, agreed nominee shareholding, and the “revolving door” between government and business.
- Focus on investigating corruption among “key minorities” (i.e. a small but pivotal group of senior officials, leading cadres, and key decision-makers at the central, provincial, ministerial, and local levels whose actions, loyalty, and compliance are deemed essential for the Party’s overall direction, policy implementation, and stability) and young cadres.
- Deepen the simultaneous investigation of bribery and bribery-giving.
- Intensify efforts against cross-border corruption.
- Cooperate with the Standing Committee of the National People’s Congress in formulating an anti–cross-border corruption law.
4. Rectify misconduct and corruption affecting the daily lives of the masses (such as in rural governance and medical insurance).
5. Give full play to the deterrent effect of political inspections.
6. Strengthen the self-construction of disciplinary inspection and supervision teams (cracking down on “darkness under the lamp,” or corruption in anti-corruption agencies).
CCDI plenum propaganda
PRC state media published multiple commentaries praising the Fifth Plenary Session of the 20th CCDI and Xi Jinping. Key commentaries include:
Jan. 13 — “Xinhua Commentator: Advancing Comprehensive Strict Governance of the Party with Higher Standards and More Concrete Measures — First Commentary on Studying and Implementing General Secretary Xi Jinping’s Important Speech at the Fifth Plenary Session of the 20th CCDI”
Notable passages from the commentary include:
- “To govern the country, one must first govern the Party. Only when the Party thrives can the nation be strong.”
- “Advancing an unprecedented anti-corruption struggle with the sense of mission of ‘offending a few thousand people is better than letting down 1.4 billion people’ (得罪千百人，不負十四億).”
- “The more effective Party self-governance and discipline enforcement are, the stronger the safeguards for economic and social development.”
- “Anti-corruption is the most thorough form of self-revolution… maintain an unwavering high-pressure stance and continuously enhance the penetrative power of anti-corruption efforts.”
Jan. 14 — “People’s Daily Commentator: More Scientifically and Effectively Confining Power Within an Institutional Cage — On Studying and Implementing General Secretary Xi Jinping’s Important Speech at the Fifth Plenary Session of the 20th CCDI”
Notable passages from this commentary include:
- There is a need to “more scientifically and effectively confine power within an institutional cage.”
- “Ensure that institutions are dense but not cumbersome, as well as effective and functional… prevent ‘locking a cat in a cattle pen’ or ‘confining a tiger in a paper cage.’”
- “Make institutional rules truly become electrified high-voltage lines.”
- “Only by letting power operate in the sunlight and strengthening the enforcement of explicit rules can hidden rules lose their market.”
- “Recognize that laws and regulations are not only a ‘tightening hoop spell’ but also a ‘protective talisman.’” (“Tightening hoop spell” is a “Journey to the West” reference to the Monkey King’s golden headband and how the Tang Monk uses it to rein in Monkey.)
Our take
1. The political signals released at the Fifth Plenary Session of the 20th CCDI and in state media commentaries about the meeting suggest the CCP leadership views the current political environment as fraught with dangers and crises. To overcome perceived challenges, the Xi Jinping leadership is turning once again to the anti-corruption campaign.
i) A comparison of key formulations in CCDI communiqués over recent years reveals a clear shift in the CCP’s assessment of the anti-corruption situation from confidence to growing anxiety.
- 2021: The CCDI communiqué declared with great fanfare that an “overwhelming victory has been achieved and consolidated.” The focus of anti-corruption work was on oversight related to poverty alleviation and pandemic control.
- 2022: The communiqué shifted the emphasis of anti-corruption work to “self-revolution,” and appeared to be aimed at paving the way for Xi Jinping to consolidate more power at the 20th Party Congress and ensure that officials are politically loyal to him. Key phrases at the time included “breaking the historical cycle” and the “Two Establishes.”
- 2023: The communiqué described as the year of “full implementation” of the “self-revolution,” with anti-corruption efforts concentrated on finance, state-owned enterprises, and grain procurement and sales. The communiqué also stressed political supervision and an integrated approach.
- 2024: The communiqué described the anti-corruption situation as being “still severe and complex,” with priority given to healthcare, infrastructure, and statistical fraud. The communiqué also issued explicit warnings that corruption was becoming more “concealed, mutated, and upgraded in form.”
- 2025: The communiqué emphasized that the task of “eradicating the soil and conditions for corruption remains arduous,” with a focus on new quality productive forces, cross-border corruption, and new forms of corruption.
- 2026: The communiqué reverted to highly alarmist terms in describing the state of corruption in the regime, including using words like “stumbling blocks” and “roadblocks.” This is a tacit acknowledgment by the Xi leadership that corruption is highly resilient and regenerative, and that arresting individuals alone cannot “uproot” it. The repeated references in official documents to “new forms of corruption” and “hidden corruption” indicate that officials’ methods of evasion are also escalating, making detection and investigation exponentially more difficult.
ii) The anti-corruption campaign is being mobilized to aid the CCP in economic defense against the backdrop of slowing economic growth and intensifying geopolitical competition (particularly with the United States). This is seen from Xi’s speech at the plenum where he explicitly defined “comprehensively and strictly governing the Party” as the “fundamental guarantee” for achieving the goals and tasks of the 15th Five-Year Plan. This differs from the past where anti-corruption work was treated purely as a Party-building task. The Xi leadership’s decision to wield the anti-corruption campaign as economic defense is understandable considering that any form of resource appropriation could directly threaten regime security during an economic downturn.
As the state channels massive resources into “new quality productive forces” such as semiconductors, quantum computing, and new energy, these sectors will rapidly become new hotspots for corruption (see the first entry in this newsletter). The CCID plenum’s explicit call to strengthen oversight in these areas sends an unambiguous signal that there will be zero tolerance in the PRC for the kind of corruption in scientific research that was seen in the late Soviet period. Any behavior that obstructs the implementation of central economic decisions, engages in “image projects,” falsifies data, or fraudulently extracts state subsidies will be treated as high-level political transgressions and their perpetrators will be disciplined accordingly.
Meanwhile, Beijing’s efforts over the past three years to “rectify” the financial sector will continue into 2026. The Xi administration views “collusion between politics and capital” in the financial sector as the root cause of accumulated financial risks, property bubbles, and local government debt crises. The CCID’s 2026 policy deployment suggests that anti-corruption efforts will push further into the deep waters of “power shielding capital.” This implies that the heads of state-owned banks, private equity tycoons, and top-tier investment bankers involved in collusion could become targets. The Xi leadership’s objective is to completely sever the channels through which financial oligarchs interfere in politics, and to ensure that finance returns to its core function of “serving the real economy.”
iii) The Xi leadership is looking to micromanage governance through the anti-corruption campaign as it seeks to improve the CCP’s ability to resolve crises.
The Xi leadership acknowledges that its campaign-style approach to anti-corruption has failed to address corruption at its root. The People’s Daily commentary on the CCDI plenum describes past institutional failures as “locking a cat in a cattle pen” (regulations that are too broad and loose to catch agile, corrupt actors) and “confining a tiger in a paper cage” (institutions that lack enforcement power and exist only on paper). The commentary then notes that the plenum calls for “more scientifically and effectively confining power within an institutional cage” and requires institutional design to be “dense but not cumbersome,” or a move toward microscopic control of the entire power-exercise process. Beijing’s attempt to step up micromanagement of governance and tighten scrutiny of leading cadres and other “key minorities” signals profound distrust toward regional and departmental heads.
Beijing is also looking to unleash the anti-corruption campaign on specific targets in 2026 to better achieve its objectives:
- New quality productive forces: Strictly investigate “leakage, diversion, and misuse” of funds and interest transfers in technology subsidies and industrial funds. The aim is to ensure that state resources are precisely channeled into chokepoint areas such as semiconductors and artificial intelligence, and to prevent bureaucratic groups from carving up the dividends of the “whole-of-nation system.”
- Financial security: Continue to deepen anti-corruption efforts in the financial sector, cracking down on “revolving doors” and “shadow shareholders.” The objective is to prevent collusion between financial oligarchs and regulatory officials, and to ensure that the financial system only serves the real economy and the regime.
- Rural revitalization: Focus anti-corruption efforts on “petty corruption by flies and ants,” as well as rectifying micro-level corruption at the grassroots. This is intended to maintain social stability at the base of society, prevent social unrest caused by the collapse of grassroots governance, and consolidate the foundation of governing legitimacy.
- Cross-border corruption: Promote the formulation of an “Anti–Cross-Border Corruption Law” and strengthen international efforts to pursue fugitives and recover illicit assets. This represents an extension of domestic legal authority overseas, cutting off channels for capital flight, and serving the integrity requirements of the Belt and Road Initiative.
2. The Xi leadership’s effort at “more scientifically and effectively confining power within an institutional cage” will more likely lead to more problems rather than resolve the fundamental problem of corruption in the CCP regime.
In the name of preventing corruption, regulatory frameworks have become extraordinarily complex. At the grassroots level, officials increasingly choose “doing nothing” over “doing something wrong” in order to minimize risk. This culture of passivity (also referred to as “lying flat”) has emerged as a new chronic ailment of the regime, and is likely to worsen as Beijing intensifies anti-corruption monitoring and regulation to curb excessive bureaucratization to improve administrative efficiency. As officials increasingly conclude that the safest strategy for political survival is mechanical compliance with procedures, the dynamism and innovation required for economic development will be stifled to the detriment of China’s economy.
Xi’s emphasis on political loyalty will also bring him endless headaches when it comes to personnel. In a political environment defined by the elevation of a single supreme authority and with everyone forced to demonstrate their loyalty, superiors will increasingly be unable to distinguish between performative and genuine loyalty towards the paramount leader (Xi Jinping). The more Xi emphasizes political loyalty, the more sophisticated these performances will become. The mass downfall of Xi’s “loyalists” since the 20th Party Congress has exposed a major blind spot in the current cadre evaluation system, and the continued purge of “loyalists” will undermine both Xi and the anti-corruption campaign over time.
Finally, Xi and the CCDI’s plenum call to forge an “ironclad” discipline inspection force and crack down on “darkness under the lamp” hints at the troubling reality of the anti-corruption system that is tasked with the regime’s “self-revolution” is itself deeply corrupt. The Xi leadership has attempted to resolve the issue of “who watches the watchers” through ad hoc mechanisms such as central inspection and supervision teams. But these mechanisms are also vulnerable to capture and co-opting by the very interests they are meant to oversee.
